Update: Home Reit (HOME ), the suspended homeless accommodation provider struggling with a rent strike and allegations of financial wrongdoing, has been approached by Bluestar, a real estate lender whose CEO previously worked for the Reit’s fund manager, over a possible cash bid.

Bluestar, founded by Benoit Gotlieb, a former employee of Alvarium Investments, has until 16 March to firm up its unsolicited approach, Home Reit said in an update to investors.

Home said there was no certainty a bid would be forthcoming although a sale of some kind looks likely as the real estate investment trust’s board said it was considering all strategic options to preserve shareholder value.

The embattled Reit said any offer by Bluestar would likely be in cash.

Winterflood analyst Emma Bird said: ‘It is difficult to imagine any way in which the fund can recover from the current situation and survive as an ongoing listed vehicle, even if the share suspension is lifted.’

Bird expected shareholders would be left with far less than the 111.2p of net asset value ascribed to the shares a year ago.

‘While the assets will clearly have some alternative use value, we note that the required refurbishments will have a negative impact,’ she said.

What is Bluestar?

According to its website, Bluestar Group is a special situations investment company set up to acquire and lend capital to real estate-backed businesses and developments in Europe. Its Bluestar Capital subsidiary offers debt finance to organisations in sub-Saharan Africa.

Gotlieb, 32, is from Belgium. He previously worked at Alvarium Investments, which owned Alvarium Home Reit Advisors before it spun off the business last month as part of its merger with Tiedeman Group in the US.

Home’s efforts to find a buyer have been hampered by the unexpected resignation of Home’s two brokers, Alvarium Securities, also part of the Alvarium group, and Jefferies International. Smith Square Partners has been appointed in their place on Monday.

It said a report by specialist housing manager Simpact, appointed last month to review its portfolio, had highlighted a serious deterioration in rent collection, with just 23% of rent collected in the November quarter. Of a £14.8m quarterly rent-roll, just £3.4m had been paid, the company said.

Legal claims have been launched against seven charity tenants who have refused to pay rent in disputes over the condition of their properties and a lack of agreed refurbishment.

Big refurbishment bill

Simpact has revealed that a quarter of the portfolio managed by Alvarium Home Reit Advisers requires some level of refurbishment at a cost of £15m-£20m. Home Reit said its financial exposure was hard to quantity as vendors of the properties were contractually responsible for the refurbishment and more analysis was being done to establish the full level of work required. Home Reit noted it had around £10m held by solicitors that it could use if necessary.

To preserve cash, the board has suspended the payment of quarterly dividends and is ’engaging’ with its lender, Scottish Widows, the investment and pension arm of Lloyds bank that lends to many investment companies.

It confirmed that Alvarez & Marsal, the forensic accounting experts, had been appointed to investigate allegations of inflated property values in early January in response to a report by short-seller Viceroy Research in November.

Home Reit shares were suspended in the New Year after a four-month delay in publishing its annual report as auditor BDO reviewed the figures in light of Viceroy’s allegations. The shares plunged 70% last year, with most of the fall in the fourth quarter.

Limited AGM

The company is due to hold an annual general meeting (AGM) of shareholders on Monday at the London office of its public relations firm, FTI Consulting.

‘Whilst the board will endeavour to be as open as possible at the forthcoming AGM, there will be a limit to what it can say due to ongoing investigations,’ Home Reit stated.

Chair Lynne Fennah said: ‘We recognise the serious issues facing the company and are examining all options to preserve shareholder value and the interests of all stakeholders.’